Apple Hospitality REIT Inc (APLE) Reports Strong Earnings Growth in Q4 and Full Year 2023
Net Income: Q4 net income increased by 798.1% to $20.8 million, and full year net income rose by 22.6% to $177.5 million.
Revenue Per Available Room (RevPAR): Q4 RevPAR grew by 2.4% to $105.01, and full year RevPAR increased by 7.0% to $116.23.
Distributions Paid: Q4 distributions paid per share increased by 4.3% to $0.24, and full year distributions rose by 70.5% to $1.04 per share.
Debt Management: Total debt outstanding, net of cash and cash equivalents, to total capitalization stood at 25.4%.
Portfolio Expansion: Acquired six hotels and a parking garage, with two additional hotels under contract for purchase.
On February 22, 2024, Apple Hospitality REIT Inc (NYSE:APLE) released its 8-K filing, detailing a significant uptick in net income and sustained growth in key performance metrics for both the fourth quarter and the full year ended December 31, 2023. The company, a real estate investment trust that invests in income-producing real estate, primarily in the lodging sector across the United States, operates under the Marriott or Hilton brands and has shown resilience in the face of industry challenges.
Financial Performance Highlights
Apple Hospitality's fourth quarter net income saw an impressive 798.1% increase to $20.8 million, while the full year net income grew by 22.6% to $177.5 million. This growth was supported by a 2.4% increase in Q4 RevPAR to $105.01 and a 7.0% increase in full year RevPAR to $116.23. The company's operating income also rose by 122.5% in Q4 and 19.9% for the full year, reflecting strong operational efficiency.
During the fourth quarter, Apple Hospitality paid distributions totaling $0.24 per common share, marking a 4.3% increase from the previous year. For the full year, distributions were $1.04 per common share, a significant 70.5% increase from the prior year. This reflects the company's commitment to delivering value to its shareholders.
Strategic Growth and Portfolio Expansion
Apple Hospitality's strategic growth was evident in its acquisition of six hotels and a parking garage for a combined total purchase price of approximately $289.8 million. Additionally, the company has two more hotels under contract for purchase, signaling a continued expansion of its portfolio. This growth strategy is supported by a robust balance sheet, with a total debt to total capitalization, net of cash and cash equivalents, of approximately 25%.
Operational Excellence and Market Position
The company's operational excellence is highlighted by its Comparable Hotels Adjusted Hotel EBITDA of approximately $104 million for Q4 and $500 million for the full year, demonstrating strong bottom-line performance despite inflationary and wage pressures. Apple Hospitality's revenue and asset management teams have effectively leveraged the company's scale and performance data to drive profitability.
Apple Hospitality's CEO, Justin Knight, expressed confidence in the company's positioning for continued outperformance in the upcoming year, citing the favorable fundamentals of the business, strength in both business and leisure demand, and limited near-term supply growth.
Looking Ahead
For 2024, Apple Hospitality anticipates net income to be in the range of $191 million to $217 million, with Comparable Hotels RevPAR Change expected to be between 2.0% and 4.0%. The company's Adjusted EBITDAre is projected to be between $452 million and $474 million, with capital expenditures estimated to be between $75 million and $85 million.
Apple Hospitality's strong performance and strategic growth initiatives position it as a resilient player in the REIT industry, with a focus on delivering consistent shareholder value and operational excellence.
Explore the complete 8-K earnings release (here) from Apple Hospitality REIT Inc for further details.
This article first appeared on GuruFocus.
